Senator asks FDIC about allegations it discourages bank relations with crypto companies

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Pat Toomey, ranking member of the US Senate Banking Committee, sent a letter to Federal Deposit Insurance Corporation (FDIC) director and acting chairman Martin Gruenberg informing him of allegations made by a whistleblower about FDIC activities. The senator suspects that the FDIC “may be acting improperly to discourage banks from doing business with legitimate cryptocurrency (crypto-related) companies.

Toomey wrote that there is confirmation of whistleblower allegations that “staff at the FDIC headquarters in Washington, DC are encouraging FDIC regional offices to send letters to several banks asking them to refrain from expanding relationships with crypto-related companies, without providing any legal basis to send such letters..”

In addition, Toomey wrote that there were reports that staff at FDIC headquarters took the highly unusual step of contacting staff in a regional office to urge them to downgrade the status of a loan to a crypto-related company, adding:

“FDIC regional office staff reportedly interpreted FDIC headquarters’ involvement in this matter as an effort to change how loans to crypto-related companies are generally classified and prevent banks from extending such loans in the future.”

Judging by the letter, the alleged letters from the FDIC were sent on or around June 6. Toomey asks Gruenberg to confirm or deny the alleged activities before the end of the month and asks if the FDIC legal division has given an opinion on the alleged activities. .

Related: Deposits at non-bank entities, including crypto firms, are not insured – FDIC

Toomey is a hawkish crypto advocate. He was a vocal critic of Securities and Exchange Commission policy. He is also the author of the Stablecoin TRUST Act and introduced the companion legislation for the Virtual Currency Tax Fairness Act of 2022 in the Senate. He expressed reservations about the issuance of a digital currency by a US central bank.